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Want to succeed in the auto industry? Try copying Hyundai

Hyundai first changed the auto world 10 years ago by offering a 10-year, 100,000-mile warranty on its vehicles.

The move created much-needed respect for the Korean automaker and more importantly, has resulted in branding Hyundai as a viable competitor to the likes of Honda.

When Hyundai unveiled its new Assurance plan earlier this year, we figured it was another potential winner for the Koreans. Assurance is a plan that allows buyers to return their car if they lose a job within 12 months of buying it. Part of the plan will even pay a customer’s car payments for up to 3 months.

We’ve been expecting other automakers to follow suit, and sure enough Ford and GM have both hopped onto the bandwagon created by Hyundai. Though it isn’t yet as heavily marketed as Hyundai’s plan, Ford now offers a program called Ford Advantage, and GM offers Payment Protection.

Under Ford’s plan, buyers who buy a new Ford, Mercury, or Lincoln before June 1 are automatically enrolled in a program that pays car payments for up to 12 months in the event of a job loss.

GM’s plan is similiar and offered on most 2008-2010 GM vehicles. A buyer will be covered for up to $500 per month for up to nine months if he or she becomes unemployed within two years of purchase.

Neither company has gone as far as Hyundai by allowing customers to return their cars.

Hyundai’s program has apparently paid off, as the company’s January sales increased 14 percent. It’ll sure be interesting to see if Ford and GM see similar results!

Are programs like Hyundai’s Assurance, Ford Advantage, and GM Payment Protection enough to get you into a car showroom?

Hyundai offered the extended warranty for the simple reason that that they had deservedly developed a reputation as a manufacturer of cheap, unreliable cars that are expensive to repair. Given GM’s reputation for making cars with higher than average repair issues, it was smart of them to adopt an extended warranty, too.
The buyback program sounds attractive on the surface, but competitors quickly seized on the fatal flaw– lose your job, lose your car. I’d say it’s pretty hard to look for a job when you’re on foot. In other words, Hyundai’s plan will only attract people who aren’t smart enough to figure out that Hyundai isn’t doing them any favors, especially if they put any kind of down payment on the car.

On the other hand, GM’s plan pays your car payments for up to a year, which gives the car buyer the real advantage of still having the vehicle to look for work and not having to get another car when they do find work. The buyer will also not lose any down payment or up-front costs with the GM plan that they would with Hyundai’s plan.